· Full year guidance unchanged, aside from exceptional costs relating to these proposed store closures

Revenue yoy growth

FY18

FY19

Q1 (13wks)

Q2

(13wks)

Q3 (18wks)

Q4 (8wks)

FY (52wks)

Q1

(13wks)

Product

+10.2%

+4.9%

+2.7%

(4.1%)

+4.1%

(2.8%)

Financial Services

(4.9%)

+7.2%

+4.6%

+8.2%

+3.5%

+9.0%

Group

+5.6%

+5.6%

+3.2%

+0.0%

+3.9%

+0.4%

Angela Spindler, CEO, commented:

"As highlighted in our full year results, this was a challenging period for fashion retail. Against this backdrop and a double-digit comparative in Product revenue, I am satisfied with our Q1 performance. At this early stage in the financial year our full year expectations are unchanged.

"In line with our online strategy, and given continued weak high street footfall, we have today commenced a consultation process with colleagues over the future of our small store estate. This action has not been taken lightly and we will do all we can to support the colleagues affected during this process.

"We continue at pace our journey to become a global online retailer, uniquely delivering fashion that fits. This will underpin our future growth, both in the UK and Internationally."

Q1 performance

Product revenue

Product revenue by brand

% change yoy

JD Williams

-2.0%

Simply Be

+9.3%

Jacamo

+2.0%

Power Brands

+2.7%

Secondary Brands

-9.1%

Traditional Segment

-9.8%

Product Revenue

-2.8%

In line with our strategy, Power Brands outperformed. The relaunched JD Williams brand continues to perform well. As expected, there remains a headwind from the migrated Fifty Plus customers, although we are confident that the actions we have taken will address this as we move through the year. Excluding these customers, JD Williams was up double-digits.

Simply Be's performance was strong, against a particularly tough comparative. The reported revenue of both Simply Be and Jacamo was diluted, by approximately three percentage points, by a weak performance of our store estate during the period.

The revenue decline in Secondary brands reflects the planned shift in marketing investment away from Fashion World, towards Power Brands. Traditional revenues declined as we focused on the online element within this segment, and reduced our recruitment activity in the declining offline segment, as guided to in our full year results. We would expect this dynamic to continue through the year.

Product revenue by category

% change yoy

Ladieswear

-4.2%

Menswear

-3.2%

Footwear & Accessories

-5.4%

Home & Gift

+0.8%

Within Home & Gift we saw a particularly strong performance in the Furniture and Outdoor Living categories.

Online metrics

Our online performance continues to be encouraging, with online revenue up 3%, and up 9% in our Power Brands. 75% of revenue is now generated online, up 5ppts year-on-year. For new customers, online penetration was 84%, up 6ppts year-on-year.

Overall traffic was up 3% year-on-year, however traffic to our Power Brands was up 14%. Smartphones now account for 57% of all sessions, up from 51% last year, with mobile devices as a whole accounting for 75%.

International

International revenue was down 8.0%, or down 5.2% in constant currency terms.

Revenue from the USA was down 15.9%, and down 7.2% in constant currency. This performance was impacted by significantly reducing investment in offline recruitment, in line with our wider strategy. We have also transitioned to new agencies in the USA, in order to support our digital approach. Marketing spend has been deferred into the second half to support exciting new initiatives and drive a stronger trading performance.

Revenue from Ireland was flat, or down 3.2% in constant currency terms, again driven by a reduction in offline recruitment activity.

Stores

We are focused on becoming a global online retailer. Reflecting this strategy, we have undertaken a review of our store estate. Given continued very disappointing footfall, and despite significant cost efficiencies being achieved, we are today entering into a consultation with store colleagues to consider closing our 20 stores ahead of lease expiry. In FY18 these stores generated £15m revenue (2% of Group revenue) and an EBITDA loss of £3m.

We anticipate that the consultation process will be completed around the time of our half year results in October. Should the decision be taken to close all 20 stores, we anticipate an exceptional cost of £18m to £22m, of which approximately half will be in cash.

Financial Services

Revenue from our Financial Services business was up 9.0% year on year, against a weak comparative. This performance was in line with our expectations. Within the revenue performance, interest lines were up double-digit, whilst non-interest lines were down double-digit, continuing the trends reported during the last financial year.

As part of our full year results we detailed the impact of moving from IAS39 to IFRS9 on our receivables provision accounting. Further to this, on 8th May, we confirmed that undrawn credit balances will be excluded from the IFRS9 provision. Our first half results in October will be the first time we report under IFRS9, with FY18 results restated to reflect the new accounting standard, and an associated reduction in net assets. For FY19 as a whole, we anticipate an IFRS9 provision of between £105m and £125m, compared with an IAS39 reported provision in FY18 of £49.2m. We continue to expect the FY19 P&L impact to be broadly neutral versus the FY18 restated results.

FY19 Guidance

Aside from the exceptional cost guidance, as discussed above, all other FY19 guidance is unchanged.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

Market Overview

UK 350 Risers and Fallers

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